The benchmark New Zealand dairy index returned to negative territory at this week’s auction after recording a slight lift at the beginning of March. At Tuesday’s GDT auction, the index fell by 2.9% with an average product selling price of $2,190/tonne. The price of whole milk powder (WMP), the key dairy commodity traded on the GDT platform, fell by almost 1% and remains below the $2,000/t mark.
Milk powder futures on the NZX had suggested prices of dairy products are set to rise for the second auction in a row after four straight declines, which did not materialise. The volume of product sold at Tuesday’s GDT also remained low. And with the majority of product for the 2015/16 season now sold, auction outturns now become increasingly important for our view of the 2016/17 season.
“Today's outturn was consistent with our view that WMP prices will bump around near current levels for much of this year before gradually improving. Consequently we remain comfortable with our forecast of $4.60 for the 2016/17 season,” said Westpac Research in a report.
The material has been provided by InstaForex Company – www.instaforex.com